China stocks mixed ahead of global index inclusion, IPO wave

SHANGHAI May 27 (Reuters) - China stocks ended mixed on
Wednesday, giving a lukewarm welcome to FTSE Russell's reception
of mainland-listed equities into its indexes ahead of a fresh
flood of new share offerings.

The CSI300 index of the largest listed companies
in Shanghai and Shenzhen fell 0.3 percent, to 5,181.43, while
the Shanghai Composite Index gained 0.6 percent, to
4,941.71 points.

Index provider FTSE Russell said after Tuesday's market
close that it would launch two transitional indexes that include
China A shares - a staggered approach that would bring local
Chinese shares into its global emerging markets benchmark in two
to three years.

Analysts said that the launch of the indexes, which will
have an initial weighting of 5 percent for China A shares -
would have limited impact on China's stock market.

There are signs, however, that after the recent strong
rally, some investors are taking profit, while others are
reducing holdings before a wave of initial public offerings
(IPO).

But investors got some comfort from economic data showing
Chinese industrial sector profits in April had their first
annual rise since September, seen as evidence by some that
China's economy could be bottoming out.

Military sector stocks remained bullish, after Beijing on
Tuesday outlined an ambitious defence strategy.

Defence-related firms including China Satellite
and Sichuan Chengfei Technology Integration surged
for a second day.